Who Has to Report Foreign Accounts and Assets
These rules reach anyone the law calls a "US person," and that is a wider group than most people expect. It covers US citizens wherever in the world they live, green-card holders, and anyone who counts as a US resident for tax purposes. The US taxes its citizens and residents on worldwide income and asks them to report foreign accounts and assets no matter where the money sits. A green-card holder who moves back to another country still reports, and an American who made aliyah to Israel still reports.
There is one narrow exception, and it is specialist territory. A green-card holder who is treated as a resident of a treaty country (Israel and Mexico both have income-tax treaties) may be able to claim non-US-person status under the treaty and step outside the FBAR. A federal court allowed exactly that in one case, it does not help US citizens, and for a long-term green-card holder the same move can itself trigger the expatriation exit tax, so we screen it carefully before anyone relies on it. For the full who-is-a-US-person detail and this exception, see our page on FBAR penalties and how to fix late FBARs.
The FBAR: Your Foreign Accounts Over $10,000
The FBAR (FinCEN Form 114) is the report of your foreign financial accounts, filed online and separately from your tax return. You file it for any year in which your foreign accounts, added together, topped $10,000 at any single point. Three details do the damage: it is the aggregate that counts, not any one account; it is the peak balance during the year, not the year-end number; and you report an account you can only sign on, even with none of your own money in it.
A foreign account is broader than a checking account. It reaches foreign brokerage and securities accounts, foreign mutual funds, cash-value foreign insurance and annuity policies, and Israeli pension and savings arrangements like kupot gemel and keren hishtalmut. Cryptocurrency has its own odd rule: an account on a foreign exchange that holds only crypto is currently outside the FBAR, but add regular money to it and the whole account comes in; our crypto and FBAR guide walks the line. For the penalties, from $16,536 a year for an innocent miss to the greater of $165,353 or half the account if the failure was willful, and the programs that fix a late one, see our guide to FBAR penalties.
FATCA and Form 8938: The Higher-Threshold Report
Form 8938 is the FBAR's cousin under a law called FATCA, and confusing the two is one of the more expensive mistakes here. It is attached to your tax return and starts at higher thresholds: $50,000 of foreign assets for a single filer living in the US, rising to $600,000 for a married couple living abroad. It reaches assets the FBAR misses, such as foreign stock you hold directly, and you can owe both forms for the very same account.
Missing Form 8938 starts a $10,000 penalty that can climb to $60,000 a year, and, worse than the dollars, it keeps your entire tax return open to audit with no deadline until you file. See what counts as a foreign financial asset and the thresholds tier by tier in our FATCA and Form 8938 guide, and a side-by-side of which form catches which asset in our Form 8938 vs FBAR comparison.
Foreign Gifts and Trusts: Forms 3520 and 3520-A
A gift or inheritance from a non-resident foreign person is not income to you, so it carries no US income tax. The catch is reporting. Once the total from one foreign person tops $100,000 in a calendar year (about $20,573 from a foreign company or partnership), you report it on Form 3520, and the penalty for skipping it can reach 25% of the gift.
Foreign trusts go a level higher. Funding one, being treated as its owner, or taking a distribution all get reported on Form 3520, and an owner also files a companion Form 3520-A, due March 15 with its own extension. Those trust penalties start at the greater of $10,000 or 35% of the amount involved, and a US beneficiary of a trust that accumulated income for years can face a throwback tax with a compounding interest charge on top. No tax may be due, yet the missed form still bites. For the calm, step-by-step version of an inheritance, see reporting a foreign inheritance to the IRS; for the penalty and the reasonable-cause fix, our Form 3520 foreign-gift penalty guide; and for how the US actually taxes a trust, our foreign trust and US tax guide.
Not sure which forms you owe?
A free 30-minute consult maps your foreign accounts, gifts, companies, and funds to every form they touch, and tells you the realistic cost to get current, before anything is filed.
Book your free consultForeign Companies and Funds: Form 5471 and PFICs
Two very different traps sit here. If you own part of, run, or share in a foreign company, Form 5471 can owe no tax and still cost $10,000 a year for not filing, and it keeps your whole return open. A foreign partnership has a parallel form, Form 8865, with the same $10,000-a-year bite. If US owners together control the company, a separate set of rules can tax you now on a share of its earnings that never reached your pocket. Ownership held by your family and by related companies can be counted toward you, so people are caught who never felt like owners.
Separately, a foreign pooled investment fund is almost certainly a PFIC. An Israeli mutual fund, ETF, or kupat gemel is the textbook case, and the default PFIC tax is punishing: your gain is taxed at the top ordinary rate for every year you held the fund, plus a compounding interest charge that routinely eats over half the gain, with a Form 8621 for each fund every year. See who must file Form 5471 and how to fix a late one in our Form 5471 guide, and why Americans in Israel get hit by their own funds in our PFIC and Israeli funds guide.
Foreign Pensions, Including Israeli Funds
A foreign pension is not a US 401(k). The US tax deferral a 401(k) or IRA enjoys, by its terms, covers US-qualified plans only, and the US-Israel treaty has no article that shelters the growth inside a retirement fund the way the US-Canada treaty does for an RRSP. So the US can tax the earnings inside your keren pensia, kupat gemel, or keren hishtalmut as they build, and tax part of the contributions when you withdraw.
These are also reportable accounts on the FBAR and Form 8938, and depending on how the plan is structured, a foreign-trust form or the PFIC rules can apply on top. Bituach Leumi, Israel's National Insurance, is treated differently, as a government benefit rather than an account with a balance. How your fund is classified is technical and genuinely unsettled, which is why we screen it and refer the definitive call. See our guide to how the US taxes a foreign pension.
Fixing Late Filings Without Making It Worse
If you are behind, there is almost always a path scaled to your situation, and one of them costs nothing. The Streamlined Foreign Offshore procedure resolves most non-willful cases for someone who lived abroad at a zero penalty; the Streamlined Domestic version costs 5% of your highest aggregate year-end balance. If you reported all the income and only missed a form, the delinquent-filing lanes can waive the penalty entirely. Willful cases use the Voluntary Disclosure Program to take criminal exposure off the table.
The one move to avoid is a quiet disclosure, filing old forms on your own outside a program: the IRS treats it as a red flag and it can turn a fixable problem into an enforcement case. Timing matters too, because these programs close the moment the IRS contacts you, and under FATCA more than 100 countries and hundreds of thousands of banks now report US account holders every year (Switzerland joins in 2028). For the eligibility walkthrough and the forms each path needs, see our guide to the streamlined filing compliance procedures. And if the IRS has already assessed a penalty, meaning a Notice CP15 arrived in the mail, the programs above are no longer the tool; the response deadline and the fight are covered in our CP15 penalty notice guide.
How We Work, and When We Co-Counsel
Foreign reporting covers a wide range, so we are honest about where our role sits. The screening that tells you which forms you actually owe, the streamlined and delinquent filings, the reasonable-cause work, the foreign-gift and inheritance reporting, and the Florida estate side are handled here, on fees quoted up front for the document work. For willful exposure, voluntary disclosure, the foreign-trust throwback math, the controlled-foreign-company computation, PFIC form calculations, and the definitive classification of an Israeli pension, we co-counsel an international tax advisor or a US-Israel cross-border specialist so you get the right depth without paying for the wrong tool.
Most of this runs remotely, by phone and video, which fits clients who are out of state or out of the country, including the many Americans living in Israel. This reporting work sits inside our broader international and cross-border practice, which also covers non-citizen spouses, non-resident estate tax, and FIRPTA. The planning side, structuring a loan, an investment, or a move in or out of the US before you sign, lives at our international tax planning hub. The first and most valuable step is the screen, because it decides everything that follows.
Frequently Asked Questions
What Do I Have to Report About My Foreign Accounts and Assets?
It depends on what you have, and it is usually more than one form. Foreign bank and investment accounts over $10,000 combined trigger the FBAR. Foreign financial assets over higher thresholds ($50,000 and up) trigger Form 8938. A foreign gift or inheritance over $100,000 triggers Form 3520. A stake in a foreign company can trigger Form 5471, and a foreign pooled fund brings in the PFIC rules on Form 8621. The forms overlap, so the same account can land on several. The first step is always to map every account and asset to the forms it touches.
I Am a US Citizen Living Abroad. Do These Rules Still Apply to Me?
Yes. The US taxes its citizens on worldwide income and requires foreign-account and foreign-asset reporting no matter where you live, even on money that never enters the country. An American who made aliyah to Israel, or who moved anywhere else, still files the FBAR, Form 8938 above the higher living-abroad thresholds, and the gift, trust, and company forms when they apply. The good news for people abroad is that years of innocent non-filing are common and usually fixable at a low or zero penalty through the streamlined route.
Can I Owe More Than One of These Forms for the Same Account?
Often, yes. The FBAR and Form 8938 are separate reports under different laws run by different parts of the government, and you can owe both for the very same account. A foreign account inside a pension can also raise a foreign-trust form and a PFIC form at the same time. This is by design, not double counting. The costly mistake is fixing one form and leaving another open, because a missed Form 8938 or 3520 can keep your entire tax return open to audit with no deadline.
What Happens If I Have Not Been Filing These Forms?
You likely have a path that is far cheaper than waiting. If the failure was innocent and you lived abroad, the Streamlined Foreign Offshore procedure often resolves it with no penalty; a US resident uses the domestic version at 5% of the highest aggregate year-end balance. If you reported all the income and only missed a form, a delinquent filing can often still resolve it with no penalty, though the IRS removed its named late-FBAR program in July 2026, so that route now needs more care. Willful cases use the Voluntary Disclosure Program. The one move to avoid is quietly filing old forms on your own, which the IRS treats as a red flag. We screen which path fits before anything is filed.
Do I Owe Tax on a Foreign Gift or Inheritance?
Usually no. A gift or inheritance from a non-resident foreign person is not income to you under US law, so it carries no US income tax. The duty is to report it: once the total from one foreign person tops $100,000 in a calendar year, you file Form 3520, and the penalty for skipping it, up to 25% of the gift, is tied to the missed form, not to any tax owed. If foreign accounts came with the inheritance and they top $10,000, an FBAR comes into play too.
Are My Israeli Pension and Investment Funds Reportable?
Almost always, and often on several forms at once. A keren pensia, kupat gemel, or keren hishtalmut is a foreign financial account, so it goes on the FBAR and, above the thresholds, Form 8938. The pooled investment tracks inside it can each be a PFIC, and depending on structure a foreign-trust form may apply. A foreign pension gets none of the automatic US tax deferral a 401(k) enjoys, because the US-Israel treaty has no article that shelters the growth. Bituach Leumi is treated differently, as a government benefit. The definitive classification is technical, so we screen it and refer the call.
Do You Handle This In-House or Refer It Out?
Both, depending on the facts. The screening that tells you which forms you actually owe, the streamlined and delinquent filings, the reasonable-cause work, the foreign-gift and inheritance reporting, and the Florida estate side are handled here. For willful exposure, voluntary disclosure, foreign-trust throwback math, the controlled-foreign-company computation, PFIC form calculations, and the classification of an Israeli pension, we co-counsel an international tax advisor or a US-Israel cross-border specialist. We tell you up front which pieces your matter needs before you commit to anything.
Common Situations
The oleh with Israeli accounts and funds. An American who made aliyah years ago holds ordinary Israeli bank accounts, a keren hishtalmut, and a couple of investment funds, and never knew any US form was due. Because he lived abroad and the failure was innocent, the streamlined route brings him current at no penalty, and once we map the funds he learns which are PFICs and stops adding to them before the tax math gets worse.
The heir who inherited from abroad. A US citizen receives $250,000 from a parent's estate in another country and panics about a tax bill. There is no US income tax on the inheritance, but because it crossed $100,000 it goes on Form 3520, and the foreign bank accounts that came with it push her over the FBAR line for the first time. We file both cleanly for the year she received the money.
The green-card holder with a home-country company. A professional who moved to Florida still owns a slice of a family company back home and never thought of himself as an owner who had to file. Once everyone's shares are added under the attribution rules, Form 5471 was required, and several years were missed. He reported all his income, so a late filing with a reasonable-cause package brings him current before the open-return clock does more harm.
Sources of Law
- Who is a US person and the FBAR: 31 U.S.C. §5314; 31 C.F.R. §1010.350 (financial interest and signature authority; $10,000 aggregate threshold); treaty-resident green-card exception, 26 U.S.C. §7701(b)(6); Aroeste v. United States, 2023 U.S. Dist. LEXIS 208582 (S.D. Cal. 2023) (one district court, as applied). FBAR penalties, 31 U.S.C. §5321; 31 C.F.R. §1010.821; Bittner v. United States, 598 U.S. 85 (2023).
- FATCA and Form 8938: 26 U.S.C. §6038D; Treas. Reg. §1.6038D-2 (thresholds $50,000 to $600,000); §6038D(d) ($10,000 initial, up to $60,000 per year after notice); §6501(c)(8) (the return stays open until the form is filed).
- Foreign gifts and trusts: 26 U.S.C. §6039F (Form 3520 foreign gift, over $100,000 from a foreign individual or estate; about $20,573 (2026) from a foreign corporation or partnership; 5% per month to a 25% cap); §§6048, 6677 (foreign trust, Forms 3520 and 3520-A, greater of $10,000 or 35% of the transfer or distribution, or 5% of assets owned); throwback and interest charge, §§665 to 668.
- Foreign companies and funds: 26 U.S.C. §6038 (Form 5471, $10,000 per form per year; Form 8865 for foreign partnerships, §6038(a) and §6038B); Subpart F, §§951 to 951A, 957; PFIC, §§1291 to 1298 (Form 8621).
- Foreign pensions: FBAR and Form 8938 apply as above; US-Israel Income Tax Treaty (1975), Art. 6(3) (saving clause preserving US taxation of citizens); Rev. Proc. 2020-17 (3520/3520-A relief for certain tax-favored retirement trusts).
- Fixing late filings: IRS Streamlined Filing Compliance Procedures (Streamlined Foreign Offshore 0% with the 330-day non-residency test; Streamlined Domestic Offshore 5% of the highest aggregate year-end balance); Delinquent International Information Return Procedures; Voluntary Disclosure Program (Form 14457, Rev. 7-2025). The standalone Delinquent FBAR Submission Procedures page was removed from irs.gov on July 1, 2026; examiner no-penalty guidance for qualifying non-willful filers remains at IRM 4.26.16.3.11. irs.gov (retrieved 2026-07-24)
Updated on July 24, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate planning and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about US law, not legal or tax advice, and does not create an attorney-client relationship. Foreign-account and asset reporting is specialized; for willful exposure, voluntary disclosure, foreign-trust and PFIC computations, and the most complex structures we co-counsel an international tax advisor. Federal figures are adjusted periodically and may change. Your result depends on your specific facts.